Localization and internationalization differ in software development as they serve distinct functions. Internationalization, or i18n, is the process of designing software in such a way that it can easily be adapted to various languages and regions without needing significant changes. In contrast, localization, or l10n, involves the actual adaptation of the software for a specific locale, including translating text and modifying cultural elements. While internationalization focuses on creating a flexible framework, localization is about customizing that framework for specific markets, enhancing usability and relevance.